What is the Circular Economy?

The simple explanation is the circular economy is made up of three basic principles:

(1) Waste-as-a-Resource is a function to reprocess the physical materials all products are made from;

(2) Business models that function according to circular economy principles of resource management; and

(3) Design products and services that are manufactured or delivered according to circular economy principles of resource management.

Within these three basic principles is a much broader range of Functions – on this page you will find a table showing the differences between linear economic activity and circular economic activity.

The Linear Economic Model

Since the Industrial Revolution (around 1760) the economic model has progressed along, what is called, a Linear system. The diagram below shows the three stages of the Linear Economy:

(1) Taking finite natural resources [in the diagram it is oil to produce a plastic bottle]

(2) Make or manufacture into products for consumption;

(3) Becomes waste after use or end-of-life.

This economic model is not sustainable as, eventually, we shall use up all the natural resources we have and there will be nothing left for future generations.

In the circular economy, nothing is wasted. Products are made from natural (biological) or human-made (technical) materials or resources. They are recovered for reprocessing into new products, materials or alternative resources such as compost or bio-energy. To get to a point where nothing is wasted requires a major overhaul of our entire system of production, and for this, we need to explore how Design will provide the innovation for change.

The Linear Economic Model

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The Circular Economy Model

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Circular Economy Systems Diagram

There are two ways of understanding the circular economy. The first is the popular Butterfly Diagram conceived by Michael Braungart and William McDonough from Cradle-to-Cradle Design. The Butterfly Diagram demonstrates how natural (biological) and human-made (technical) materials or resources circulate in infinite production cycles facilitated at the design and manufacturing stage of products – see Design.

Technical materials: As fossil fuels, plastics, metals, glass etc. come from finite natural resources, they cannot be renewed. In the technical-cycle, it is important we design and manufacture products to be ‘future-proof’. That is for repair, reuse, remanufacture, disassembly and reprocessing of product materials. The aim is to keep all technical materials or resources in use for as long as possible.

Organic materials: Food, all organic materials from agricultural activity, water etc. are part of a biological ecosystem. In this bio-cycle, it is important to ensure that the ecosystem and biological processes can function properly. Consumption may occur in this cycle (food, water, fertilizer) as long as the material flows are not contaminated with toxic substances and ecosystems are not overloaded. When the ecosystem is balanced, organic materials are renewable.

The importance of the Butterfly Diagram is in assigning, which circular economy function provides the most value. For example, maintaining a product’s use-cycle through repair extends the resource and economic value instead of discarding the product for recycling. Extending a mobile phone use-cycle has greater economic and resource value than if it is taken apart for scrap. In addition, scrap materials may not result in them being reprocessed into secondary raw materials for reuse by manufacturers.

The second circular economy framework is the Circularity Diagram, developed by the UN Environment Programme (UNEP). This diagram directs more attention towards the role of the user or consumer in a circular economy. It illustrates that the circular economy is about sustainable production and that sustainable consumption is integral to it.  

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Fact Sheets

These Fact Sheets provide insights, trends and ideas on the circular economy in Asia and across the world. They are created for our #CircularOctober campaign. For the complete list, visit the Fact Sheets page; click on the image to download. 

Knowledge Centre

In this section there an extraordinary amount of information, including research and reports covering finance, ideas, legal, metrics & monitoring, policy, presentations, social value, systems thinking, tools and publications from Walter Stahel, plus images and infographics. 

The images of the Linear Economy and Circular Economy are from “Eriksen M, Thiel M, Prindiville M, Kiessling T 2018. Microplastic: what are the solutions? in Freshwater Microplastics – Emerging Environmental Contaminants (Eds Wagner M, Lambert S), The Handbook of Environmental Chemistry 58. Springer”. Note: Both images have been modified to reflect the Circular Economy in easier terms.